Maxicare v Carmela Estrada

GR No. 171052 | January 28, 2008

Facts:

 Maxicare is a domestic corporation engaged in selling health insurance plans. On

September 15, 1990, it engaged the services of Carmela Estrada, who was doing
business under the name of CARA HEALTH SERVICES, to promote and sell the
prepaid group practice health care delivery program called MAXICARE Plan with
the position of Independent Account Executive.
 Estrada applied with Maxicare to solicit corporate accounts, MERALCO account
included. She then submitted proposals and made representations to the officers of
MERALCO regarding the MAXICARE Plan.
 However, when MERALCO decided to subscribe to the MAXICARE Plan, Maxicare
directly negotiated with MERALCO regarding the terms and conditions of the
agreement and left Estrada out of the discussions on the terms and conditions.
 On March 24, 1992, Estrada demanded from Maxicare that it be paid commissions
for the MERALCO account and nine (9) other accounts. Maxicare denied such
claims, on the ground that Maxicare directly negotiated with MERALCO and the
other accounts, and that no agent was given the go signal to intervene in the
negotiations for the terms and conditions and the signing of the service agreement
with MERALCO and the other accounts.
 Estrada filed a complaint against Maxicare and its officers with RTC. The RTC found
Maxicare liable for breach of contract and ordered it to pay Estrada actual damages in
the amount equivalent to 10% of P20,169,335.00, representing her commission for
the total premiums paid by Meralco to Maxicare from the year 1991 to 1996, plus
legal interest computed from the filing of the complaint on March 18, 1993, and
attorneys fees in the amount of P100,000.00. CA affirmed in toto the RTC’s decision.

Issue:

WON Estrada is entitled to the adjudged commissions?

Ruling:

Yes. Estrada is entitled to commissions for the premiums paid under the service agreement
between Meralco and Maxicare from 1991 to 1996. Maxicare successfully landed the Meralco
account for the sale of healthcare plans only by virtue of Estrada’s involvement and participation
in the negotiations. There is finding of “efficient procuring cause”.

The term “procuring cause” in describing a broker’s activity refers to a cause originating a series
of events which, without break in their continuity, result in the accomplishment of the prime
objective of the employment of the broker producing a purchaser ready, willing and able to buy
on the owners’ terms. To be regarded as the procuring cause of a sale as to be entitled to a
commission, a broker’s efforts must have been the foundation on which the negotiations
resulting in a sale began. Herein, Estrada was instrumental in the sale of the Maxicare health
plans to Meralco. Without her intervention, no sale could have been consummated.

Also, Maxicare’s contention that Estrada may only claim commissions from membership dues
which she has collected and remitted to Maxicare cannot be upheld. The only reason Estrada was
not able to participate in the collection and remittance of premium dues to Maxicare was because
she was prevented from doing so by the acts of Maxicare, its officers, and employ.